September 13, 2013 - Rachel Miller
Businesses across the UK are losing out on millions of pounds in unclaimed property allowances and run the risk of significantly reducing the value of their premises as new tax rules bite, according to the tax and accountancy firm CCH.
Changes in the Finance Act that come into effect in April 2014, and a tougher line by HMRC under new rules that apply when properties change hands, mean that tax allowances for commercial building fixtures could be lost to a new buyer and all future owners.
Neil Tipping, senior tax consultant at CCH, said: "It is no exaggeration to say that the vast majority of commercial properties have embedded fixtures for which their owners and accountants have never claimed tax relief. It may sound too good to be true, but our experience working with a range of businesses, and their financial and legal advisers, confirms the extent of the dormant tax benefit nestling in 'integral features' of buildings."
These assets include electrical and cold water systems, air conditioning, radiators, partitioning and external solar shading. "From offices and factories to hotels restaurants, capital allowances for integral features typically account for 10% to 30% or more of the purchase price of a property," said Tipping. "We have so far discovered millions of pounds of quantifiable expenditure. It is important to be aware that there is no time bar on how far back the search for relevant expenditure can go," he added.
According to CCH, HMRC does not have a problem with properly structured capital allowance claims, but it has signalled a tougher line under new rules that apply when properties change hands. Capital allowances for fixtures could be lost to the buyer and all future owners, following the changes in the Finance Act 2012.
"Failure to identify hidden capital allowances could destroy value and significantly reduce the market valuation of properties," said Tipping. "These changes complicate an aspect of capital allowances that was already shrouded in confusion, and they raise the stakes for all involved in commercial property."